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Monday, January 02, 2012

Investment Strategy for 2012

2012 is predicted to be another tough year from analysts. Euro zone problems, US weak economy, China issues etc. But as readers might have noted at the start of 2011, analysts were predicting that the markets will continue to run ahead and the outlook was good then.

Therefore, do take those predictions as a pinch of salt. Yes, there were issues yet to be solved but that is where you can buy cheap from the market. Do not be afraid to buy when things doesn't look good. The key is to spread your investments and don't commit all in one go. Also, do remember to diversify your assets.

What will be my investment strategy for 2012? Well, they can summarized as below:

1. Continue to seek value. Value investing had served me well since the 2nd half of 2010 when I decided to position my portfolio more defensively when the markets had run up substantially after the Global Financial crisis. I will continue to avoid high growth stocks at this moment.

2. Reduce costs. Again, I will try to minimize sell trades to save on costs. I will not hesitate to buy multiple stocks to diversify my portfolio but I can control the sell trades by not engaging in switching or sector rotation activities.

3. Continue to engage in rights issues. Rights issues are good opportunities for investors to continue to increase their stake in companies via excess rights shares strategy without incurring brokerage costs. However, in a weak market, investors must be selective and only commit capital in those companies that are well-managed. Therefore, though I will still employ this strategy, I will be selective in the companies that I will subscribe for excess rights shares.

4. Participation in scrip dividend scheme. Scrip dividend scheme is a good way for investors to re-invest their dividend back into the company at a discounted price, without incurring brokerage costs. In 2011, I have participated in quite a few of these schemes and they had bear fruit, especially for those high dividend paying stocks like SP AusNet and Second Chance Properties. The compounded return of re-investing the dividend payout back into high dividend stocks will yield higher absolute dividend the next time the dividend had been declared, even if the amount declared is the same. Therefore, don't discount the effect of scrip dividend scheme.

5. Continue to overweight better stock ideas. I think readers would have noticed from my stock purchases in 2011 that most of them are my existing stock holdings. This is because since I had became a full-time investor, I have decided to focus my research effort on my existing stocks and also add more capital onto them. This is a slight change in my previous strategy of diversification across all stocks, without concern on their individual weights in my portfolio.

6. Match cash flow with expenses. Since I am now living on my investment returns, I do not have consistent income every month. Though I still receive income in a form of dividend from my investment, they are inconsistent every month. Therefore, I need to preserve some cash during low dividend paying months to pay for my expenses. This will result in cash drag in my portfolio for some months, but that is a tradeoff for matching cash flow with expenses.

7. Work on my CPF stock investment and CPF unit trust investment. Since I had left my day job, I did not receive any CPF contribution every month. Therefore, I had not been buying any stocks using CPF funds since then, as my CPF stock investment limit had not been increased. Also, since I had transferred those dividends received from my CPF stock investment back to CPF-OA, the stock limit has actually gone negative, due to lack of fresh CPF contribution. The CPF stock investment limit has been a pain in the neck for me, as I could not continue to invest in new stocks even if I have funds from dividend distribution. I might need to make some minor changes to my CPF stock investment portfolio. I have also neglected my CPF unit trust investment in 2011, and I need to review those unit trusts again and determine action plans (if any) for them in 2012.

All in, there are a lot of things to be done. Besides managing my own portfolio, I will still actively attend AGMs/EGMs. To all readers, have a great year ahead!

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Sunday, January 01, 2012

My Investment Portfolio (December 2011)

December 2011 was another quiet month. Trading volume was also miserably low as most investors are having their year-end holiday. STI lost further ground to finish the year at below 2650 points.

For this month, I have attended the following AGMs/EGMs - SPH, Global Investments, Mirach Energy, Hoe Leong, Unified Communications, Pacific Shipping Trust, Latitude Tree, Armarda, NEL, Asia Water, Miyoshi and Beyonics. It was an emotional farewell at the scheme meeting as Beyonics shareholders bid farewell to Mr Chay and his fellow board of directors after scheme had been approved. There was drama at Miyoshi AGM as the resolution for directors' fee had been defeated by poll.

There are not much changes in my top 30 holdings list this month, due mainly to inactivity in the market.

I have bought the following companies from the open market this month - AsiaMedic, Brothers, Casa Holdings, FDS Networks, HongFok, Lion AsiaPac, Lum Chang, New Toyo, Ocean Sky, Popular, SHC Capital, Tiong Seng, UIS and Wheelock Properties.

I have participated in the following rights issue - GMG Global. I have accepted the following voluntary delisting offer - Pacific Shipping Trust. My shares in Hsu Fu Chi had also been acquired via Scheme of Arrangement.

I have participated in the following scrip dividend schemes - SP AusNet, Tai Sin and Second Chance Properties. I also converted the following convertible bond into shares - WBL Corp.

January 2012 is also expected to be a short month due to the Chinese New Year holidays. There is also not much corporate action expected as companies with financial year ending December 2011 will be finalizing their full-year results. I will seek to re-invest my proceeds from Pacific Shipping Trust and Hsu Fu Chi prudently when opportunities arises.

My S'pore Stock Portfolio - Top Holdings, cash investment only (correct as at 30 December 2011)

Top 30 Holdings (Sing$ Denominated shares)
1. Jardine C&C
2. F&N
3. SGX
4. Noble Group
5. UIS
6. A-REIT
7. SembCorp Marine
8. Bukit Sembawang Estates
9. CapitaMall Trust
10. Viz Branz
11. Metro Holdings
12. Singapura Finance
13. Sing Investment & Finance
14. SP AusNet
15. VICOM
16. PSL Holdings
17. Wheelock Properties
18. Bonvests
19. Hersing
20. OSIM International
21. The Hour Glass
22. United Engineers
23. APB
24. Transpac Industrial Holdings
25. Fragrance Group
26. Keppel Corp
27. Aspial
28. First REIT
29. ABR Holdings
30. Khong Guan Flour Milling

Top 5 Holdings (US$ Denominated shares)

1. Jardine Strategic
2. Dairy Farm
3. Jardine Matheson
4. Hong Kong Land
5. Mandarin Oriental

Top Holdings (HK$ Denominated shares)
1. Fortune REIT
2. Tan Chong International

Top Holdings (Aust$ Denominated shares)
1. AV Jennings

Top 5 Holdings (CPF OA investment)
1. Keppel Corp
2. Streettracks STI ETF
3. CapitaMall Trust
4. A-REIT
5. Challenger Technologies

My Hong Kong Stock Portfolio
1. Peace Mark Holdings - Under Voluntary Liquidation

My Unlisted Company Portfolio
1. Automated Touchstone Machines Ltd
2. Iconic Global Limited
3. Greatronic Limited
4. China Printing & Dyeing Holdings
5. General Magnetics
6. Fastech Synergy
7. Beauty China
8. Memory Devices
9. Jurong Tech
10. FM Holdings
11. Japan Land - Pending EGM to approve Liquidation
12. Zhonghui - Under Judicial Management
13. FerroChina - Under Liquidation
14. FirstLink Investments

My Unit Trust Portfolio:
http://www.fundsupermart.com/main/community/Portfolio_View.svdo?id=P199

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A self-directed investor, looking to invest for retirement needs and bypass all those expensive financial planners/insurance agents. Investing is fun, profitable or most important of all, knowledge gained is useful for the rest of your life!

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